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JUST DIAL IPO

Just Dial is an India’s No.1 Local Search Engine. It was integrated on the year 1996, as Just dial Limited. Mr. V.S.S Mani, Managing Director and Chief Executive Officer of the Company.

Just Dial’s search services are available to users through Internet, mobile Internet, telephone and text {Short Message Service}. Just dial is a Twenty Four/Seven Free Search service on a single national number 08888888888 that receives over 130 Million Calls every year. It presents reliable information about local businesses, products and services to the users in over 2000 cities in India. They encompass more than 300 million customers using Just Dial Services.

Just dial gets its revenues chiefly from selling advertisement and through qualified leads. The company having more than 145,000 paid advertisers. They are placing advertising in 4 ways available to promote brand or advertise on Just Dial including Listing on Web, Listing on Phone Search, Listing on Mobile Search and Placing Video Ads.

Objects of the Issue:

Attain the benefits of listing the Equity Shares on the Stock Exchanges and

Bring out the sale of 17,497,458 Equity Shares by the Selling Shareholders.

ISSUE DEAILS:

Issue Open: May 20, 2013 – May 22, 2013

Issue Type: 100% Book Built Issue IPO

Issue Size: 17,497,458 Equity Shares of Rs. 10

Issue Size: Rs. 822.38 – 950.11 Crore

Face Value: Rs. 10 Per Equity Share

Issue Price: Rs. 470 – Rs. 543 Per Equity Share

Market Lot: 25 Shares

Minimum Order Quantity: 25 Shares

Listing At: BSE, NSE, MCX-SX

Grade: CRISIL is given 5/5 which Indicates Strong fundamental compared to to other listed equity securities in India.

COMPANY FINACIALS:

Just Dial has posted 28%-47% annualized growth in terms of revenue in the last Five years. The revenues have increased from Rs. 71.6 Crores (FY2008) to Rs. 275.6 Crores (FY2012). For the Nine months ending Dec’2012, company has posted Rs. 271.6 Crores.

Company has been operating around 15% to 18% margins in the last Three years.

FINANCIALS

2008-03

2009-03

2010-03

2011-03

2012-03

9 Months Ending Dec’12

Revenues {Rs. In Millions}

716.03

918.14

1,347.63

1,876.60

2,752.15

2,716.10

Profits {Rs. In Millions} after Tax

20.89

75.41

193.25

288.25

505.81

470.80

Profit %

2.92%

8.21%

14.34%

15.36%

18.38%

17.33%

Revenue Growth % {YoY}

—

28%

47%

39%

47%

32%

ADVANTAGES OF IPO:

Crisil rated Five/Five which indicates strong fundamentals.

It offers 10% discount on the floor price to the retail investors. This offers safety net to the retail investors.

Company is debt free with negative working capital cycle.

Strong growth in future

DISADVANTAGES OF IPO:

Just Dial IPO NAV is only Rs. Fifty Seven (as on 31-Dec-12) whereas the issue price band is Rs. 470 to Rs. 543 (pre-discount)

From side to side this issue Just dial is selling the existing shareholders capital and company is not raising any capital for its own.

Retail subscription is only for 10% of the issue price. Due to small retail subscription, promoters can manage the safety net option.

Present there are several IPO’s which were graded by Crisil as Five/Five like Care, L&T Finance which are now available at discount after pos- listing.

There are other competitors like Google India, Ask me, Asklaila, Sulekha etc. which may provide firm rivalry in future.

CONCLUSION:

The Company Just dial has time after time innovated and stayed ahead of competition. Any hostile moves from big competitors like Google India (This is a High Competitor Power Search Engine World Wide) need to be carefully monitored. Company is growing in terms of revenues and margins. Considering the earnings per share of Rs. 8.99, the P/E ratio would work out to be 52-60. The price to book value (P/BV) comes to 8.2 to 9.4. There are no listed peer companies to compare the issue price. Somewhat, we feel that this issue is aggressively priced. Leaving the aggressive pricing, if an investor subscribes at Rs. 423 (Lower price band of Rs. 470 minus 10% discount for retail investors) for a maximum of 100 lot / < Rs. 50,000, even in case of discount after listing, there would be less risk of loss. If the price goes down beyond 20% of the issue price, Safety net any how is there to safeguard the investors. Investors should subscribe this IPO considering these points. At last we need to watch one more point On BRLM’s front, Citi Group and Morgan Stanley had mandate for SEVENTEEN and ELEVEN IPOs and out of them FOUR IPOs failed to give listing gains to investors from both of them.

* Disclaimer: These recommendations are based on the theory of technical analysis and outlook of the market performance. Readers those who buy and sell securities based on the above information in this column are solely responsible for their actions. The author won't be liable or responsible for any sort of financial and legal loses suffered by the traders.